Toys For U, Inc. just purchased a new asset costing $500,000. The machine will be depreciated straight-line over a 10-year period using the convention of taking a half year's depreciation in the first year. Given the following information about old assets the firm already had, calculate net fixed assets at year end. $\begin{array}{lr}
\text {Gross Fixed Assets }&\$ 2,000,000\
\text {Accumulated. Depreciation }&\$ 960,000\
\text {Continuing Anumal Depreciation Expense }& \$ 240,000\
\end{array}$

Question

Quizplus · Accepted Answer

The new asset's first-year depreciation is $25,000 ($500,000 / 10 years * 0.5). The total depreciation for the year is $265,000 ($240,000 + $25,000). Accumulated depreciation becomes $1,225,000 ($960,000 + $265,000). Net fixed assets are $1,275,000 ($2,500,000 - $1,225,000).

Toys for U, Inc A) $765,000 B) $925,000 C) $1,275,000 D) $1,600,000

Toys for U, Inc A) $765,000
B) $925,000
C) $1,275,000
D) $1,600,000